Thinking about starting your own business by buying a franchise? The good news is there are a lot of people with pertinent information to share. And, as anyone of them would tell you, good preparation is key to success.
Your best resource bar none are the company’s current and, yes, former franchisees. They offer the best information on what it’s really like to run that business, and their perspective is so valuable because they’re most likely to give it to you straight. By contrast, when you call a franchisor, you may be talking to a salesperson on commission who will tell you only what will make his company look like a great deal.
So for a more accurate picture, talk to the franchisees, the more the better. Get a list of franchisees from the franchisors, which they are required by law to provide, and call to make an appointment. Each of these franchisees has stood where you are, and most will likely be happy to help. But respect their time!
What do you need to ask franchisees? A franchise coach can help you separate the wheat from the chaff, but you will want to ask about several critical aspects of their business.
Questions for Franchisees
How did you choose this franchise? Did it match your particular area of expertise? What is your business background? How long have you been in the business?
Are you satisfied with the level of ongoing support from the franchisor? Face it, without support, you’re a fish out of water. Support is a huge part of what your franchise fee is supposed to pay for. Plus, if you owe ongoing royalties to the franchise company, you want to make sure you’re getting something in return for your investment.
Was the training you received substantial? Was it sufficient to prepare you for running this business? Was it thorough enough for someone with no industry experience?
Has the actual business operation matched your expectations? What challenges should a new franchisee be ready to meet?
What do you like the most about running your business? What do you like the least? Would you do it again, knowing what you know now? Why or why not?
How long did it take you to reach break-even? Or are you on track to reach break-even? Does the franchise have the potential to earn the franchisee a six figure income? Approximately what percentage of your gross are you earning in profits?
Approximately how much per year do you spend on advertising and marketing, rent/utilities, insurance, merchandise, other?
How would you rate the franchisor’s marketing programs and tools? Does this generate a significant proportion of your business?
How difficult is it to find and manage employees? How are they compensated?
The bottom line: You want to know if the franchisee’s experience seems appealing, to see if this franchise’s process would work for you. Sometimes you may learn that what hasn’t worked out for the franchisee might actually work for you since you have a different package of experiences and skills. Or you might learn that, due to some recent staff turnover, the franchisor is no longer able to provide good support systems.